Stable policy needed for local auto industry: expert

Friday, October 30, 2009 18:39

Following Sai Gon Giai Phong’s report on protection and development of the domestic auto industry, SGGP heard from several economists including Nguyen Tien Dung, chairman of the Saigon Transportation Mechanical Corporation’s Management Board, who said the Government’s strategy for developing the auto sector is not immutable and needed to be adjusted.

The Government and enterprises have been affected by two contrary trends toward protection of local industrial production and integration according to the World Trade Organization and Asian Free Trade Area commitments.

Though the Government approved in 2002 a detailed strategy for developing the auto industry until 2010 with a vision to 2020, it has been unable to locate where the Vietnamese auto industry lies on the map of international auto industries.

Without this information, it’s hard to determine how and how long it will take to develop the local auto industry, Mr. Dung emphasized.

Changes in tax policies have had an impact on market demand, mainly because of changes in pricing, which have caused difficulties for firms in making both short and long-term business plans.

As a result, the market is sometimes short of cars, and sometimes abundant but without buyers.

Regulations on increasing the rate of domestically made parts used in local vehicles are also not clear, while its management is also lax.

Stable strategy and policies needed

Mr. Dung said that developing the local auto industry has to be done according to three factors: government, enterprise and market.

The Government should only create conditions to support and boost the development of the market but not directly intervene in it, he said.

The key factor is enterprises’ dynamism.

The strategy for developing the Vietnamese auto industry needs to be adjusted in terms of targets, measures to hit the target, funding, supporting policies, organization and implementation, and based on the country’s advantages in terms of labor force and market, said Mr. Dung.

According to Mr. Dung, the strategy should be formulated with the following considerations:

1. The industry should focus on the production of certain vehicles like buses, passenger cars, trucks, and vehicles for special use that incorporate high technology and environmental safety.

2. The industry should manufacture and export auto parts. For the first phase, all parts made locally should be for export and then gradually for the domestic market. Partners and suppliers should be chosen via the country’s bilateral relations.

3. There should be policies and mechanisms to support Vietnamese brand name products, and the Party’s program to encourage consumers to buy Vietnamese-made goods needs stronger implementation.

The Government should issue policies to develop public transport across the country.

There is a strong need for long-term and stable policies regarding the auto industry because tax polices on auto and parts have changed continuously, affecting enterprises’ business plans.